The Trump administration’s protectionist policies now face a counterattack from European and Asian policy makers, said Joachim Fels, Pimco’s global economic adviser, who defines a “cold” conflict as one fought with words and covert action rather than outright currency intervention.

Their weapon? Just as the Federal Reserve heads determinedly down the tightening path, peers including the Bank of Japan and European Central Bank are turning dovish.

“The empire of non-U.S. central banks has started to strike back,” Fels said in a research note. “If continued, this could lead to a counter-rally of the U.S. dollar in the remainder of this year.”

The conflict began when President Donald Trump took office in early 2017 and immediately sought a lower dollar to boost America’s competitive position; Europe and Asia largely acquiesced to this for fear of a worse alternative: the erection of trade barriers. But now that the U.S. is pressing ahead with tariffs anyway, the gloves are off for its opponents, Fels said.

He cites the recent walk back from plans for withdrawal of stimulus by the BOJ, ECB and the Bank of England, as well as China’s decision to ease its reserve requirements. Moreover, with Japan racked by political scandal and the French-German push for banking and fiscal union in limbo, both will be relying even more on their central banks to tide over their respective economies.

“With the Fed seemingly determined to keep raising interest rates in response to fiscal stimulus while other central banks are turning more dovish, a stronger dollar may now be in the making,” Fels said. “And if so, the U.S. administration is likely to strike back at some stage. In short, the cold currency war is here to stay.”